Shipping companies are taking a new look at scrubbers

By Tony Grainger

Scrubbers are hot property in the shipping industry. Almost 30% of the world’s container ships are now equipped with scrubbers, according to an Alphaliner survey published in January 2022.  

Alphaliner estimates that 150 container vessels were fitted with scrubbers last year alone, bringing the global total to 850.

And although high freight market margins are leading to hesitation in taking vessels out of service for scrubber retrofits, fleet owners are increasingly keen to fit scrubbers to take advantage of a difference in cost between low- and high-sulfur fuels.

Almost 30% of the world’s container ships are now equipped with scrubbers, according to an Alphaliner survey published in January 2022.  

The company has fitted the technology to 69% of its 204-strong fleet, Alphaliner said, while South Korean container transportation and shipping firm HMM has scrubbers on 83% of its 75 vessels.

Even fleet owners such as Hapag-Lloyd, described as “a long-time sceptic,” have begun installing scrubbers. The company has fitted the technology to 17% of its 252-ship fleet.

Recent weeks have seen a rash of scrubber procurement announcements as shipping firms look to meet emissions regulations while using cheap oil to offset the soaring cost of fuel.

Netherlands-based Seatrade Groningen and commodities freight specialist Safe Bulkers are among the companies following the trend.

Safe Bulkers has committed to “additional scrubber installations” on two of its Capesize class vessels, according to its first-quarter results this year.

Scrubbers are also being included as standard in new vessels, with one of the most eye-catching examples being Evergreen’s latest ultra-large container ship, which is 200 feet longer than the world’s largest aircraft carrier.

The Ever Aria ultra-large container vessel and others built for Evergreen’s fleet are “being outfitted with a hybrid scrubber desulfurization device and the latest global technology design for green energy saving,” according to The Maritime Executive.

Fleet owners have historically used scrubbers as a way of complying with the International Maritime Organization’s 2020 emissions regulations (IMO2020) while continuing to use high-sulfur fuel oil (HSFO).

Another option is to use very-low sulfur fuel oil (VLSFO), which meets IMO regulations but is more expensive than HSFO.

As the Ukraine crisis puts pressure on global oil markets, even VLSFO-using vessels might benefit from scrubbers as a way of cutting fuel costs by switching to HSFO.

“The current price premium of VLSFO over HSFO increased to $276/mt [metric ton] in March 2022—the highest monthly spread since IMO2020 was implemented in January 2020,” noted Hellenic Shipping News in May.

This price differential is feeding through to vessel profitability. In the very large crude carrier (VLCC) segment, for example, “earnings have remained very weak,” said TradeWinds, except for scrubber-fitted ships.

These “have averaged more than $17,000 per day since the start of March, up about one-fifth on the January 2021 to February 2022 figure,” TradeWinds reported.

Frontline, the world's fourth largest oil tanker shipping company, is seeing clear financial benefits from a young fleet where 88% of ships are regarded as ‘eco’ vessels, with reduced fuel consumption, and 53% have scrubbers.

“All the scrubbers are focused on the VLCC and Suezmax assets that have the highest consumption,” said Lars Barstad, Frontline’s chief executive officer, in a March 2022 earnings call.

“We're up now to $17,100 per day premium for a VLCC, between an eco with scrubber compared to a traditional non-eco VLCC or vessel,” he said.

“For the Suezmaxes, the premium is $9,500 compared to non-eco and for the LR2s [long-range 2-type tankers], it's $8,500 a day premium compared to a non-eco.”

A lack of scrubbers in fleets has even been linked to poor company valuations in the maritime transport sector, in reference to companies such as EuroDry.

Pacific Green’s proprietary scrubber technology, which has been installed on 110 ships, including those belonging to Scorpio, Union Maritime, Ridgebury Holdings and Landbridge Group, among others, is ideal for these ocean-going vessels.

It can be deployed as a closed-loop system to avoid water contamination, which is a problem for vessels such as cruise liners that spend a lot of time in port.

This makes it suitable for ships such as roll-on, roll-off passenger vessels, where there is also growing interest in scrubber technology.

Companies installing scrubbers on their vessels “will immediately comply with the 0.5% global sulfur cap and will also be futureproofed against impending regulatory change,” reports gCaptain.

This futureproofing is of growing importance as fleet owners face increasing restrictions on emissions. As well as IMO2020, fleets are having to contend with more and more port-specific mandates.

In May 2022, for example, the Maritime and Port Authority of Singapore announced it was introducing enhancements to its Green Port Program.

The move aims to encourage environmental sustainability among harbor craft and ocean-going vessels calling at the Port of Singapore. Such measures are becoming commonplace.

While they ultimately aim to force a move away from fossil bunker fuels altogether, fleet owners can use scrubbers to reduce the carbon footprint of their operations by avoiding use of low-sulfur fuel oil, which increases black carbon emissions.

Black carbon is responsible for up to 21% of the maritime industry’s contribution to climate change, according to research. Reducing the pollution black carbon causes is just one more reason to install scrubbers on your fleet now.